AUSTIN, Minn. — Hormel Foods Corp. has entered into a definitive agreement to acquire the Planters snack nut portfolio from the Kraft Heinz Co., Chicago.
The acquisition includes the Planters, NUT-rition, Planters Cheez Balls and Corn Nuts brands. Hormel Foods will acquire the business for $3.35 billion in cash in a transaction that provides a tax benefit valued at approximately $560 million, equating to an effective purchase price of $2.79 billion.
"Planters is an iconic leading snack brand with universal consumer awareness," said Jim Snee, chairman, president and CEO of Hormel Foods. "The acquisition of the Planters business adds another $1 billion brand to our portfolio and significantly expands our presence in the growing snacking space. … This acquisition also meaningfully broadens our scope for future acquisitions in the snacking space."
Kraft Heinz CEO Miguel Patricio called the deal a “momentous step” in the company’s transformation.
“It will enable us to sharpen our focus on areas with greater growth prospects and competitive advantage for our powerhouse brands,” he said.
As part of the Kraft Heinz operating model, consumer-driven platforms and platform roles help to focus its efforts within each geographic segment, the company said. Kraft Heinz prioritizes growth areas and takes strategic actions where appropriate.
“This is a great example of using agile portfolio management to improve our growth trajectory,” said Kraft Heinz CFO Paulo Basilio. “As we move forward, we plan to continue deleveraging as we explore accretive investments to accelerate our strategy.”
The Planters snack nut portfolio net sales were approximately $1 billion in calendar year 2020. The proposed transaction is expected to close in second-quarter 2021, subject to regulatory review and approval.
Operating margins are expected to be accretive to the grocery products business in 2022 and enhance margins and cash flows for the total company. Hormel Foods expects to attain synergies of approximately $50 million to $60 million to be realized by 2024. The acquisition includes three dedicated production facilities located in California, Arkansas and Virginia.
"The acquisition of the Planters-branded business further demonstrates our disciplined financial approach to M&A," said Jim Sheehan, executive vice president and CFO of Hormel Foods. "We expect this acquisition will responsibly leverage our balance sheet and will not compromise our disciplined capital allocation policy, especially our commitment to dividend growth."
Hormel Foods Corp., based in Austin, Minn., is a global branded food company with more than $9 billion in annual revenue across more than 80 countries worldwide. Its brands include Skippy, SPAM, Hormel Natural Choice, Applegate and others.